Strategic Overview: Meet the cross-channel challenge

Preparing for a mobile and cross-channel future poses huge challenges that can’t be ducked. Looking across the whole industry, perhaps the British retail sector isn’t as far advanced here as many suppose, argues Jonathan Wright

BRITISH RETAILERS ARE rightly feted for the way they have adapted to the digital age. Early to build transactional websites, retailers were equally early to understand the power of cross-channel retail, a world where consumers access different channels – whether going to the store, browsing via PC or using a mobile device – as they move towards a purchase. Accordingly, the rest of the world often looks to the British retail sector when it tries to work out what might be coming next.

Yet it’s important to interject a note of caution here. This is a picture based on the work of leading companies, often larger, well-funded retailers with a comprehensive digital presence and, if not pureplays,

networks of stores in landmark locations. Look across the whole retail sector and you can equally point to companies that have struggled to adapt to the changing retail landscape.

In this context, one figure in particular jumped out at us when we initially researched the Mobile and Cross-channel Dimension. Of the IRUK 500, only 169 retailers had mobile apps. Breaking that figure down further, only 93 retailers had ‘advanced’ apps, which we defined as those with a transactional facility.

At first glance, this may not seem a particularly important statistic, until you stop to consider how mobile devices bind together cross-channel retail. What if we too often think about an app as a nice-to-have feature when we should be thinking about having a sophisticated app as evidence that a retailer in turn is far more likely to have sophisticated cross-channel strategy? Suddenly, the idea that 331 of the IRUK 500 retailers didn’t have an app at all takes on a far greater significance.

A BRIEF HISTORY OF APP DEVELOPMENT…

If British retailers are so good at cross-channel retail, why do they seem slow to utilise apps? According to Oyvind Henriksen , CEO and co-founder of mobile technology company Poq Studio , one of InternetRetailing’s partners in the IRUK 500 research, it’s a question we need to approach from both technical and commercial viewpoints.

To that, we might also add the idea of ‘legacy thinking’. According to Henriksen, CTOs tackling mobile projects typically have a background in websites. Instinctively, they want to use HTML5. The mobile web seems to be the natural way forward, but there’s a big problem with this approach. “The problem is systemic, the problem is that people are trying to build their mobile experience on a document format from the 1990s, from 25 years ago,” he says.

Facebook’s experience here is instructive. The company tried to use HTML5 as the basis of its mobile web experience, and for its apps for iOS and Android, a so-called hybrid approach. It didn’t work, the app performed poorly and, in September 2012, Mark Zuckerberg conceded: “The biggest mistake we made as a company was betting too much on HTML5 as opposed to native.”

It’s a scenario Henriksen says he often see repeated. “The CTO will always say, ‘No, I want to do mobile web.’ They need to try it and realise, ‘I’m now spending 90% of my time bug fixing and trying workarounds, and trying micro-implementations to get the whole thing up.’ Then give up and then do it properly. That’s just a pattern we keep seeing again and again and again.”

If that’s the technical perspective on why surprisingly few retailers have sophisticated apps, the commercial perspective is around the cost of development. Henriksen sees the situation as having been like the 1990s, when every website was a huge undertaking because sites were built “from the ground up and by hand every single time”. One reason why so few retailers have sophisticated apps may simply be because development costs have been high.

However, this is changing. Poq Studio has built an app commerce platform, analogous to the ecommerce platforms sold by Demandware, Hybris or Magento, so that retailers no longer have to reinvent the wheel every time. The cost of going native is coming down, and we would expect the IRUK 500 2016 to reveal a growth in the number of retailers using transactional apps.

THE BIGGER PICTURE

As to whether these retailers will be happy with the commercial performance of this technology, that won’t just be down to how well it works. Before going further, it’s important to emphasise we’re not advocating apps as somehow being an answer to retailers’ cross-channel challenges. Rather, we’re suggesting the most effective apps work well because they’re intrinsic to an overall cross-channel strategy.

It’s also worth pausing to consider the deeper assumptions that underpin such strategies. A typical narrative around the development of digitally enabled commerce begins with transactional websites, charts how digital technologies have come to permeate the shopping experience in different channels, and then considers how retailers have tried to reduce the friction between channels – the move from multichannel to cross-channel.

While there’s nothing specifically wrong with this narrative, it rather rests on the idea that the advent of the web was a huge disruptive event, which it was, but downplays the importance of what’s happened since Tim Berners-Lee had his big idea. In short, it’s a fixed web-centric view of the world.

Now start instead from the assumption that mobile technology is what’s transforming retail. It’s not such a big leap. According to Forrester research, 42% of the global population will own a smartphone by the end of 2015. Within this narrative, you might see the creation of 3G networks as being at least as important as the creation of the world wide web.

Or perhaps we shouldn’t bother to make the comparison. Once you see the development of digitally enabled retail as being punctuated by disruptive events rather than resting on one single bright idea, it becomes far easier to see that cross-channel retail will quickly evolve to be very different from today.

The increasing use of apps, for example, which has rather crept up on us, may have far more profound effects than we yet realise. Oyvind Henriksen, for instance, argues there’s a kind of new internet developing, one of apps that are integrated with each other. “It’s much less about navigation from page to page,” he says. “Each unique app is personalised and tailored to be your best experience. It’s a much more living, much more organic future.”

THE INTERNET OF EVERYTHING

This doesn’t mean we should expect an app internet to replace the world wide web anytime soon, or indeed ever. Rather, it’s just one example of the way new digital technologies will change how we behave and, because it’s so often customers who have driven mobile commerce, the way customers using new technology in unexpected ways will change the way retailers operate. Already, a customer accessing digital services via a smartphone is potentially behaving very differently from a customer using a PC, simply because a smartphone is an object that gets carried around – and when you consider how much we now use our smartphones, this really is a profound change.

“It is a misnomer that consumers only carry out certain activities online on their mobile,” says Jess Stephens , chief marketing officer at mobile and marketing specialists SmartFocus . “We have reached a tipping point where more than 50% of online activities occur on the mobile. What changes behaviour, then, is context. While I am on the train commuting I am very likely to search for a new home or carry out a lengthy insurance quote. However, when actually on the move, Google or location-enabled apps are going to get my attention.”

Even at the start of what looks like a long-term shift towards a mobile-first world, Stephens’ words suggest it’s already possible to see nuances in still-emerging new patterns of behaviour. To visualise how much more radically our interaction with digital domains is going to change over the next two decades, we need to imagine a future where digital technologies are far more pervasive, where all kinds of objects have a digital presence in what’s been dubbed the internet of things – and which SmartFocus, using a term that better conveys what lies ahead, dubs the internet of everything.

“There will be no channels, just seamless interactions,” says Stephens. “As the internet becomes like air, and connectivity issues become a thing of the past, online and offline channels will mingle, blur and ultimately vanish as a concept. Personalisation and contextualisation in brand conversation – digital or otherwise – will be the norm.”

[caption id="attachment_69053" align="alignright" width="350"] Amazon’s highly personalised app makes it a leading player in a long-term shift towards a mobile-first world[/caption]

In such a future, a truly omnichannel world, 4G or better will be the norm; beacons will be commonplace in all kinds of locations and send out personalised messages and offers [see the article on personalisation], and smartphones, and other devices such as smart-watches, will double as payment devices. This is Henriksen’s picture of the future, but with internet-enabled bells and whistles on.

If such visions seem as yet to be a little airy, the stuff of near-future science fiction, then let’s drag things back to the present day. Forget for a moment investing here as a way to prepare for what lies ahead, as important as this is, retailers also need to invest in cross-channel retail – whether we’re talking click and collect, beacons or even such mundane yet technically challenging features as real-time stock visibility so that customers don’t waste time going to a location where an item isn’t available – because all the evidence suggests these are the kinds of services customers want right now.

That’s ultimately why the apparently small matter of developing an app that’s genuinely useful, such as B&Q’s app, which also doubles as a loyalty card, is so important: it’s both valued by customers today, and it offers insights and hands-on experience that will help the retailer when the next wave of cross-channel technology arrives. Nevertheless, we again need to emphasise that retailers still need to work out how the app sits within a wider cross-channel offering, as B&Q has done. An app may serve as evidence of a retailer developing a cross-channel strategy, but it can’t be a substitute for one.

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